Defective-Product Claims Cause Legal Morass

The ads have been running in newspapers across the country. Some contain drawings of what appear to be a strange-looking crustacean with a long, skinny tail.

"Did you use this IUD?" the ads ask.

Ads such as these, placed by personal injury lawyers, have helped generate the avalanche of lawsuits that on Aug. 21 forced A. H. Robins Co., maker of the Dalkon Shield birth-control device, to file for bankruptcy law protection.

They have also brought huge profits for many of the lawyers, spurring a legal controversy that is at the heart of the congressional debate over changing the country's product liability laws.

As many of the lawyers see it, their ads have helped alert thousands of women injured by the shield to their rights to compensation from Robins.

"It's a real consumer service," said James Hovland, one of a group of Minneapolis lawyers who ran targeted ads in midwestern states last fall that lead to about 400 new cases.

"There were a lot of women out there who couldn't have any kids because of the Dalkon Shield, and they were sitting at home blaming themselves . . . . These women wouldn't have gotten anything if it had been left up to Robins."

But to Robins, and many business groups, the plaintiffs' lawyers are modern-day gunslingers who have reaped a financial bonanza by exploiting an irrational and chaotic legal system. Their aggressive solicitation of clients and lucrative contingent fees have helped turn Dalkon Shield litigation into a mushrooming industry.

More than 14,000 Dalkon Shield lawsuits have been filed against Robins. This year, 11 years after it was pulled from the market, new claims still were pouring in at the rate of 371 per month, or more than twice that during 1984.

"The lawyers all along have been the ones who are the real beneficiaries of this massive litigation," said Roscoe Puckett, a spokesman for Robins. "Many of them have been out there hustling up as many clients as they can . . . . The plaintiffs are not actually receiving all the money the public might think they are."

Most lawyers on both sides agree that at least $124 million of the $378 million that Robins and its insurer have paid out in awards and settlements so far has gone into the pockets of plaintiffs' lawyers, who generally charge between 33 percent and 40 percent in contingency fees for each case.

Add those figures to the plaintiffs' lawyers costs, which might reach 10 percent or more, and the $107 million that Robins has paid to defense attorneys, says Puckett. That means that more money has ended up going to legal fees, more than $268 million, than to all the Dalkon Shield victims combined.

In fact, some law firms have become so dependent on Dalkon Shield litigation that they were financially threatened by Robins' motion to file for bankruptcy protection. By putting a freeze on all Dalkon Shield lawsuits, the motion cut off, at least temporarily, virtually their only source of income.

"I don't have any work anymore," said Larry Strick, an associate in the six-person firm of Conklin, Davis and Friedman in San Francisco that has handled nearly 1,000 Dalkon Shield lawsuits. "About 90 percent of our work is Dalkon Shield-related. I'm probably going to get laid off."

The debate over the activities of plaintiffs' lawyers has cropped up repeatedly in recent years as an increasing number of U.S. corporations have been threatened by massive litigation, fueling an explosion in insurance costs that can ripple through the economy in the form of higher prices for consumers.

The skyrocketing number of asbestos lawsuits forced the Manville Corp. to file for bankruptcy protection three years ago. The conduct of lawyers in the Bhopal, India, poison gas leak, some of whom flew over to India immediately after the disaster and rounded up thousands of clients, has drawn a sharp rebuke from some in the profession.

"The system is irrational," said Victor E. Schwartz, a Washington lawyer who represents the Product Liability Alliance, a coalition of business groups that has lobbied for a change in the country's product liability laws. "All the studies have shown that more money ends up going to the lawyers than to the victims . . . . It's clear that you have to get the lawyers out of the system."

But lawyers for the plaintiffs claim businesses are lobbying Congress as an attempt to protect themselves from the consequences of corporate irresponsibility.

The lawyers cite the Robins case, in which the Richmond-based drug company has yet to acknowledge there was anything defective about the Dalkon Shield despite repeated jury findings that it caused pelvic infections, involuntary abortions, sterility and other injuries to women who used it.

Moreover, the company vigorously contested every lawsuit filed against it for years, thus driving up the legal fees on both sides.

This strategy was once outlined by former Robins attorney Roger L. Tuttle in a 1972 letter when he described the company's posture this way: " . . . try any case that is actually filed without consideration of settlement . . . appeal adverse verdicts to the highest court . . . and also persuade plaintiffs' attorneys that the Robins Company is not a 'patsy' when it comes to the Dalkon Shield."

"It's outrageous," said Michael Ciresi, a Minneapolis lawyer who has been one of the fiercest Dalkon Shield litigators. "For 12 years, they've been attacking these women, stalling on cases, obfuscating and appealing every one. . . . I find it rather hypocritical for A. H. Robins to say they're concerned about money going to the victims."

Fueling the debate is a tort system that allows a company to be hit again and again for punitive damages. Most civil judgments result in awards for compensatory damages that reimburse victims for medical expenses and lost earnings as well as for pain and suffering. But juries also can award punitive damages to punish a company they find has engaged in "reckless" or "unwarranted" conduct.

The companies point to what they view as a fundamental injustice in the legal system. When a corporation is accused of criminal conduct, it goes on trial once and, if found guilty, is assessed a single fine.

But in civil litigation, there are no limits to the number of punitive damage awards a company can be forced to pay. Robins has had punitive damages awarded against it 11 times, with judgments ranging from $5 to $7.5 million. The inherent uncertainty surrounding the size of future punitive damage awards has been cited by Robins officials as a major factor in their decision to seek bankruptcy protection.

"Punitive damages are the pot of gold at the end of the rainbow that the plaintiffs' counsel has always been seeking," said Puckett. "It's our view that the company never did anything that warranted the imposition of punitive damages . . . . We don't think Robins or any other company should be subjected to repetitive, punitive damage awards."

As Puckett's comment suggests, huge punitive damage awards also mean a larger contingency fee for the lawyers. But for the lawyers who try these cases, those big fees are the reward for the risk they assumed when they agreed to take the case on, usually going head to head with the blue-chip Richmond firm of McGuire, Woods & Battle that has represented Robins.

Bradley Post, senior partner in a three-man Wichita, Kan., law firm, has been one of the pioneers in Dalkon Shield litigation. Eleven years ago, he filed the first lawsuit that went to a jury trial, winning an $85,000 judgment on behalf of his client.

Since then, Post's firm has handled more than 200 Dalkon Shield lawsuits. Post has also played a leading role in the protracted process of legal discovery, ferreting out Robins documents that showed how the company aggressively marketed the device despite internal evidence suggesting it did not live up to the company's advertising claims.

Last May, Post's persistence finally paid off big when he won the biggest Dalkon Shield case to date -- a $9.2 million jury verdict, including $7.5 million in punitive damages, on behalf of a 33-year-old woman whose reproductive organs had been removed after using the shield.

The case is now under appeal, but under Post's standard contingent fee, 40 percent of the amount ultimately collected -- which in this case would be $3.7 million -- will go to Post and his co-counsel who tried the case.

"I make no apologies for it," said Post. "We worked on that case for more than two years . . . . I've spent thousands of hours of time on the Dalkon Shield."

"Nobody says our system is perfect," he added. "But it's the best that's ever been devised . . . .